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The Ultimate Free Course for Options Trading
Main Post:
Here’s a free resource for options trading I created. 60 + lessons that teach everything you need to know to run a good options portfolio.
Here's the link:
https://predictingalpha.com/the-ultimate-guide-to-selling-options/
Backstory
A couple years ago I wrote a series on reddit about how to sell options profitably that the community loved. I’ve finally put together a completely free archive of everything I know about options and option selling.
I made this because there's a lot of noise out there around options education, so this is the no BS course I wish existed when I was getting into the space. I tried to make it easy to go through but realistically some of it will be challenging because hey, options are complicated.
What the course covers:
- Basics of how options work - All the characteristics and important parts of option contracts.
- Volatility module - Teaches you how volatility works and impacts option prices.
- Learning and interpreting option greeks - Complete breakdowns of each option greek, how they interact with each other and why they matter for your trades.
- Skew and term structure - How to think about different strikes and expirations like a professional.
- Option selling structures - 4 different ways to structure your trades and how to pick between them.
- Trading strategy fundamentals - Basically how to treat your trading like a business and really understand how to extract returns from the market.
- How to actually make money - Serious strategy talk. Now that you know how options works, here’s how you actually make some money.
- Two evidence backed strategies that work - A complete guide for selling options on ETFs and selling options around earnings events. Two well known, documented strategies that generate solid returns.
Hope you all like the course, and hopefully it levels up our community and we can have some awesome discussions.
Top Comment: Cheers! I'll def save this and check it out during the fall as I'm too busy IRL as is, but I've been looking for resources. Been buying stock since Aug 2024 and it's been a new learning curve. I'm up 8% so far but want to learn more about options trading. Wanna be able to give my kids down-payment once they're adults etc. Much appreciated
What are good stocks to trade options (just doing research)
Main Post: What are good stocks to trade options (just doing research)
Top Comment: There's no answer for this, though usually higher volume helps so that your buys/sells have higher chances of going through. You can do anything with options. Stocks that are collapsing are good for options. Stocks that are skyrocketing are good for options. Stocks that aren't moving at all are good for options. All three can also be terrible for options. Whether a stock is "good" for trading options depends on your strategies and knowledge level. Anyone can make or lose money trading options for any stock. If you're asking this, then you're still not sure what options even are; focus on learning what they are before worrying about which stocks you should trade. Not understanding options means that you could be handed the "best" stock to trade for the day and you'd still bankrupt yourself.
Want to start options trading any tips for beginners
Main Post:
I’m 22 years old and I want to start learning about options for extra income. I want to pay my way through school and eventually be able to live off my trades. How much start up capital should I save? Any book recommendations would be greatly appreciated as well. Any recommendations on good sources of knowledge for beginners would be greatly appreciated
Top Comment: $SPY LEAPs. Income won’t be immediate but damn near guaranteed. If I had ~$5K to blow, I’d buy a $575 call for 15AUG25 on $SPY. It’s about 395DTE, and I’d sell when delta reaches 0.7-0.75 and repeat around the same DTE (>365days). No need to be exact on the DTE, but it helps keeping time away. InTheMoney on YT helped me starting out. Learn your Greeks, learn your technical analysis, and stay on liquid assets (my go-to’s are $SPY & $QQQ). I also wouldn’t venture towards individual stocks starting out d/t volatility but trading options is trial by fire no matter how educated you become. Welcome to trading options!
Is option trading that risky!
Main Post:
I always wanted to learn trading and recently got to know about 'option trading ' but a lot of members in this subreddit seem to have a bad experience with it , please enlighten me with all your experiences and what would you all suggest , should I get into it or not! Thanks to all
Top Comment: best way to make money in options is to not do options because money saved is money made
Option traders! Tell me what a day in your life is!!
Main Post:
Hello thetagang, I'm new to option trading and the markets in general and am looking for inspiration. So far, on the surface, selling options attracts me the most.
I want to know what a typical day in a life of a full-time/part-time trader is and how much a good option seller makes in ROI (or whatever the common metric is for the winrate). Also I'm aware making big money will take years, not easy or a get rich quick scheme and such :) I'm here to know about YOU :D. So don't be shy and tell me how hard/easy/exciting/boring/profitable or "that time I lost my house" etc.
Thanks all!!
Top Comment: This is asked once in a while, but I'll answer again since it has been a bit. I've been trading options "full time" for going on about 7ish years. I make full time in quotes as I spend maybe 15 to 30 minutes a day on actual trading activities, but use trading income as an income stream. To me, trading is freedom as I can earn a decent income from my capital, but without having to have a job and boss, or punch in to a clock, and whatever. It is running a small business with myself as the sole employee. With mobile devices I can watch or manage my trades from most anywhere, even the golf course. ;-D The strategy I trade is the wheel as it has just worked well for me for many years. The hard work and time is doing research and due diligence and ongoing review of the stocks to be traded which can take several hours a week based on the size of the account and the number being tracked. I tend to do this in the evening or on Saturday morning, but this takes a lot more time then entering, managing and closing trades. Personally I love trading and think it is still fun after all of these years. I enjoy it so much I spend more time on reddit (than I should) helping other traders get started so they can trade as well. I treat trading like the business it is and the wheel is very boring compared to other strategies that are higher risk and often make less money, or even lose money. If you want to be a serious trader who makes a reasonably reliable return and income, then expect it will not be exciting . . . In fact, the more boring the better as that means trades are closing over and over to make small but lower risk profits. Returns are very individual and based on the trader, but also how the market is. Most new traders report making about 10% to 15% per year in returns, some lose money the first year or two, and those with good knowledge and experience can make more. I've had a range of a 12% annual return to a 50%+ return in 2021. I would not try to inspire you as much as prepare you for what is likely to be a long journey until you have reasonably reliable success. Expect it will take as long as 6 months of learning and practicing to understand how it all works and to build out your trading plan, then up to 2 years until you have it all dialed in. Based on your annual average gains you will find it will take a substantial amount of capital to make a decent income. If you'd like to make around $1K per week, or $52K per year, and have an exceptional annual of 20%, then it will require about a $260,000 in capital. While accounts can be built over time, you can do the math on how long it will take. If you want to explore this then I'd suggest opening a paper trading account on a full featured broker like TOS to get started learning - https://tickertape.tdameritrade.com/tools/papermoney-stock-market-simulator-16834 Something to note is that paper trading is a sim and is not an accurate representation of real money trading, but can give you a taste for you to see what lies before you if you want to trade. This is the wheel plan I posted over 5 years ago. I still trade it and have kept up to date - https://www.reddit.com/r/options/comments/a36k4j/the_wheel_aka_triple_income_strategy_explained/ Feel free to ask questions and I'll answer if I can. -Scot
Help me understand Option Trading
Main Post:
Hey guys so for the last 5 hours I have been trying to understand how option trading works and this is what I got so far:
- Long call - buy it when you think the stock price is about to increase. Profit Potential: Unlimited. Loss potential: Premium paid.
- Short Call - buy it when you think stock price is about to decrease. Profit Potential: Premium received. Loss Potential: Unlimited.
- Long put - buy it when you think stock price is about to decrease. Profit potential: unlimited (till strike point hits 0). Loss potential: premium paid.
- Short put - buy it when you think stock price is about to go up. Profit potential: premium received. Loss potential: unlimited or value of current strike price.
So then wtf is short selling? Also when do I do a call and when do I do a put?
Top Comment: Expect to spend a few months as there is a lot to learn! 5 hours is just a taste. ;-D Long = Buy. Theta decay works against these trades as this lowers the option price (extrinsic value) since long trades profit from the option price increasing, buying to open low and selling to close higher. Buy to Open for $1.00 and Sell to Close for $1.25 = 0.25, 0.25 X 100 = $25 profit per contact. Short = Sell. Theta decay works for short option to help them profit as you sell to open high and work to buy back lower to profit. Sell to Open and collect $1.25 and Buy to Close for $1.00 means keeping 0.25 of the credit for a $25 profit. Short selling refers to stocks borrowed from your broker and sold by you on the open market for the current price. You need to replace these shares and are expecting the stock to drop so you can buy them back later at a lower profit. Sell 100 shares short at $50 per share bring in $5,000 and your account will show -100 shares. If the stock price drops to $45 per share, you can buy +100 shares back for $4,500 and keep the $500 as profit. Starting with -100 shares short, then buying +100 shares to replace them, equals 0 shares and being out of the position. It should not noted that if the stock went up to $55 then it would cost $5,500 to replace the shares for a $500 loss. You would buy to open a long call when your analysis indicates the stock price will move up in a specific timeframe (expiration date). If the stock moves up by enough in the timeframe then the call option can be sold to close for a profit. You would sell a short call when your analysis is that the stock will drop in the timeframe (expiration date). Sell to open the call and it will profit if the stock drops by enough when it can be bought to close. Puts are the opposite. Buy to open a long put when the analysis is the stock will move down. Selling to open a put when the stock is expected to move up. A quick note about a key difference between buying and selling is that buying requires the stock to move up faster than the theta decay erodes the price, and by enough to compensate for the cost paid to open. Selling has an advantage in that we want the option price to erode, so theta decay can help these profit. Stated another way, a long (bought) option requires the stock to move in the correct direction by a good amount to profit, however, a short (sold) option can profit if the stock moves in the correct direction, doesn't move at all (due to theta decay), and many times even if the stock moves in the wrong direction. Because of this most experienced options traders sell options and few buy them. Note that r/options has a lot of links and a new trader thread where any questions can be asked.